The construction industry scheme (CIS) was devised in the early 1970s to limit the amount of tax lost as a result of under-declarations or failures to notify chargeability by subcontractors, many of whom came to work in the UK for relatively short periods without paying any tax.
The scheme operates to withhold tax at source at the point of payment, thereby reducing the risk of a subsequent default by the subcontractor. Although, if the subcontractor can prove he has complied with his tax obligations, he is able to receive payments gross. CIS potentially requires deductions to be made at source from payments due to self-employed subcontractor construction businesses, a feature which is unusual within the UK tax system.
The scheme has undergone regular changes since its inception and the current regime came into effect on 6 April 2007.
For the interaction between the quarterly reporting requirements for employment intermediaries and CIS, see the end of this guidance note.
Construction industry scheme
In order to discuss CIS, it is important to define the terms.
Contractors
Only contractors are
Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+™
Access this article for free with a 7 day trial of Tolley+™ Guidance and benefit from:
- Expert practical tax guidance
- Ready-made templates, step-by-step-guides, interactive flowcharts and checklists
- The latest news updates, insights and analysis
Popular Articles
Payment of the remittance basis charge
Payment of the remittance basis chargeRemittance basis chargeThe remittance basis charge is an annual charge payable by ‘long-term’ UK residents for the privilege of claiming the remittance basis.Taxpayers who wish to utilise the remittance basis (but do not qualify for it automatically) must pay
Self assessment ― amendments and corrections
Self assessment ― amendments and correctionsOnce a self assessment tax return has been filed, both HMRC and the taxpayer (or the agent) has the right to make changes to the return. There are different time limits depending on whether it is a correction by HMRC or an amendment made by the
Indexation allowance and rebasing
Indexation allowance and rebasingThis guidance note explains the general rules surrounding the availability of indexation allowance (which was frozen at December 2017) on the disposal of company assets and provides information on the rebasing rules for assets held on 31 March 1982. For an overview
